Key Takeaways
- Oracle shares dropped after fiscal second-quarter revenue came in below expectations.
- Analysts are mixed about the cloud company’s outlook, with different firms calling the same results “very solid” and “less impressive.”
- Oracle unveiled a collaboration with Meta that will develop AI agents based on Meta’s Llama large language model.
Oracle (ORCL) shares tumbled after the cloud company’s fiscal second-quarter revenue fell short of Wall Street’s expectations, but analysts are mixed on what to make of its future.
Citi analysts said they’re “still not seeing meaningful upside to total cloud revenue” which grew 24% year-over-year to $5.9 billion, driving “muted estimate revisions.” The firm maintained a “neutral” rating but raised its price target to $194. That represents a nearly 10% premium after the Oracle stock dropped 8% to $176.80 intraday Monday.
Deutsche Bank holds a “buy” rating and $200 price target. Oracle delivered “very solid F2Q results that prompted a second look” thanks to both artificial intelligence (AI) and non-AI successes.
Oppenheimer, which maintained a “perform” rating, said Oracle’s results were “less impressive than recent quarters” but similarly cited “robust growth” in the company’s Oracle Cloud Infrastructure (OCI) division.
Oracle deepens AI relationship with Meta
Notably, OCI revenue rose 52% to $2.4 billion, beating the firm’s expectations. The company announced an expanded relationship with Meta (META), which will see the companies utilize Oracle’s AI Cloud Infrastructure to develop AI agents based on Meta’s Llama large language model.
“On the AI side we were impressed by the news of having landed Meta as a new customer,” Deutsche Bank analysts wrote.
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